Graham Corporation · NYSE:GHM
Graham — Q3 FY2022 Earnings Presentation
16 slides from Graham's earnings presentation, Feb 7, 2022
Slide 1: Graham Corporation Q3 FY2022 Teleconference
Graham Corporation Q3 FY2022 Teleconference NYSE: GHM • February 7, 2022 Daniel J. Thoren, President and Chief Executive Officer Jeffrey F. Glajch, Vice President & Chief Financial Officer Page 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks, uncertainties and assumptions
Slide 3: Q3 FY22 Overview
Q3 FY22 Overview Revenue of $28.8 million, up 6% over prior-year period Diluted loss per share of $0.35 primarily due to Navy project labor and material cost overruns at Batavia facility Suspended dividend; obtained waiver of financial covenants and working with lender to amend credit facility
Slide 4: What Led Up to Q3 FY2022?
What Led Up to Q3 FY2022? The Perfect Storm: Batavia Operations in Transition Batavia Operations Navy Backlog Build Transition to defense business Earned confidence of U.S. Navy and prime contractors and built record backlog Overlapping critical projects Navy Commercial Navy-wide quality reset
Slide 5: 3Q Actions and Long-Term Solutions
3Q Actions and Long-Term Solutions Strong Growth and Margin Opportunities with Improvements in Defense for Batavia Ops Batavia Navy Operations Labor Plan vs. Actual 3Q Actions Increased labor hours to stay on schedule (in thousands) and meet higher specs Redirected internal resources & outsourced
Slide 6: Q3 FY22: Allocated Resources to Meet Requirements
Q3 FY22: Allocated Resources to Meet Requirements ($ in millions, except per share data) Sales Adjusted EBITDA and Margin(1) $34.1 $1.8 $27.2 $28.8 6.7% (9.0%) 6.7% ($2.6) Q3 FY21 Q3 FY22 Q3 FY21 Q2 FY22 Q3 FY22 Gross Margin GAAP and (1) Sales increased $1.6 million, or 6% over Q3 FY21 Adjusted Dilu
Slide 7: YTD FY22: Strategic Diversification into Defense
YTD FY22: Strategic Diversification into Defense ($ in millions, except per share data) Sales Adjusted EBITDA and Margin(1) $4.0 $83.1 5.6% ($5.4) $71.8 (6.5%) YTD FY21 YTD FY22 YTD FY21 YTD FY22 Gross Margin GAAP and (1) Sales increased 16% driven by defense industry Adjusted Diluted EPS + $31.9 mi
Slide 8: Expect Amended Lending Agreement in Q4 FY2022
Expect Amended Lending Agreement in Q4 FY2022 CAPITALIZATION Noncompliant on two of three ($ in millions) covenants with term loan and revolver Dec. 31, Sept. 30, 2021 2021 Suspended dividend subject to analysis Cash and cash equivalents of capital priorities and lending $ 14.0 $ 16.5 agreement
Slide 9: Order Growth Driven by Market Diversity
Order Growth Driven by Market Diversity ($ in millions) Orders Q3 FY22 TTM Orders $133.7 million $68.0 Space 4% $61.8 Other 13% $45.6 $31.4 $52.3 $20.9 Defense Chem/Petrochem 14% $13.4 $12.4 49% $2.4 $5.4 $18.5 $19.0 $22.4 $9.5 $8.0 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Refining 20% Quarterly Net
Slide 10: Graham Fiscal 2022 Guidance
Graham Fiscal 2022 Guidance(1) Revenue: $120 million to $125 million Gross margin: 8% to 10% SG&A: 16% to 17% of sales Adjusted EBITDA: Break even in Q4 FY22; ~$(5.0) million for FY22 Capital expenditures: $2.5 million to $3.0 million (1) FY2022 guidance as of February 7, 2022 The revenue, gross mar
Slide 11: Execution of Strategy: Evolving into Defense Business
Execution of Strategy: Evolving into Defense Business Longer-term visibility into future naval programs – ships and submarines BN acquisition strengthens presence in defense industry and brings long history of defense experience • Contributed $26.6 million of $43.5 million to defense industry Addres
Slide 12: FY2023 and Beyond
FY2023 and Beyond Graham Corporation Create related group of mission critical engineered product businesses that win on quality, performance and customer trust Graham Manufacturing Barber-Nichols Future Opportunities Diverse markets Diverse markets Get beyond current • Navy • Defense challenges • Re
Slide 13: Transforming to Drive Value
Transforming to Drive Value Leverage transformational Upgrade talent and add acquisition to accelerate required experience from growth in defense industry Board of Directors to skilled and enhance knowledge labor Preparing for refining Contained challenges; and petrochem focused on cash generation u
Slide 14: Supplemental Information
Supplemental Information Page 14
Slide 15: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (Unaudited, $ in thousands) Three Months Ended Nine Months Ended December 31, December 31, 2021 2020 2021 2020 Net (loss) income $ (3,730) $ 1,060 $ (7,348) $ 1,986 Acquisition related inventory step-up expense 27 - 68 - Acquisition related costs 111 - 373 - Change in
Slide 16: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation (Unaudited, $ in thousands) Three Months Ended Nine Months Ended December 31, December 31, 2021 2020 2021 2020 Net income (loss) $ (3,730) $ 1,060 $ (7,348) $ 1,986 Acquisition related inventory step-up expense 27 - 68 - Acquisition related costs 111 - 373 - Amorti